Thursday, September 28, 2006

ABA National Institute on Securities Fraud

The first day of the ABA’s National Institute on Securities Fraud provided interesting perspectives on a host of issues. Catching the luncheon speaker and two afternoon panels confirmed to me that this was a well balanced program, that was offering both government and defense perspectives. It was also nice to see the judiciary participating. Details of the program can be found here.

The luncheon speaker Commissioner Annette L. Nazareth, after stating the usual government disclaimer of not speaking in her government capacity, opened by stating that securities fraud would be with us for years. Setting forth guidelines used by the SEC, she emphasized the amount of discretion truly available in deciding what avenue should be taken in a specific case. And although the word "discretion" may not have been uttered, there was a recognition that the remedy could be tailored to fit the facts of the case.

Who to indict, who will only be subjected to a civil action, and who will receive a total pass, are prominent concerns in the securities fraud area. But should this discretion be reconsidered by the court when an individual who is convicted, faces sentencing? Should defense counsel be arguing for a lesser sentence because cases of equal culpability were deemed civil and not prosecuted?

One afternoon panel moderated by Professor John Coffee examined a hypothetical that looked at a back-dating option scenario initially with a charge of mail fraud. Perhaps the most fascinating part of this panel was to hear the Hon. Jed Rakoff speak about the mail fraud statute, as he authored many years back the leading article on this statute.  The article includes in the title that it is Part I, but Part II has never surfaced in the law reviews.  It was interesting to hear what might be included in Part II, should he ever decide to write the next chapter of mail fraud. The panel discussed the Fifth Circuit decision in the Brown case (Enron Nigerian Barge case - see here) and how this decision might fare in other jurisdictions.

The panel moved through a well crafted hypothetical exploring issues related to the Stein case, the Thompson Memo, and sentencing issues.  This was a hypothetical perfect for a law school exam.


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